MARTHA RADDATZ: Good evening, and welcome to the first and only vice presidential debate of 2012, sponsored by the Commission on Presidential Debates. I’m Martha Raddatz of ABC News, and I am honored to moderate this debate between two men who have dedicated much of their lives to public service.

Tonight’s debate is divided between domestic and foreign policy issues.

And I’m going to move back and forth between foreign and domestic since that is what a vice president or president would have to do.

We will have nine different segments. At the beginning of each segment, I will ask both candidates a question, and they will each have two minutes to answer. Then I will encourage a discussion between the candidates with follow-up questions. By coin toss, it has been determined that Vice President Biden will be first to answer the opening question.

Mitt Romney’s financial company, Bain Capital, invested in a series of firms that specialized in relocating jobs done by American workers to new facilities in low-wage countries like China and India.

During the nearly 15 years that Romney was actively involved in running Bain, a private equity firm that he founded, it owned companies that were pioneers in the practice of shipping work from the United States to overseas call centers and factories making computer components, according to filings with the Securities and Exchange Commission.

While economists debate whether the massive outsourcing of American jobs over the last generation was inevitable, Romney in recent months has lamented the toll it’s taken on the U.S. economy. He has repeatedly pledged he would protect American employment by getting tough on China.

“They’ve been able to put American businesses out of business and kill American jobs,” he told workers at a Toledo fence factory in February. “If I’m president of the United States, that’s going to end.”

Speaking at a metalworking factory in Cincinnati last week, Romney cited his experience as a businessman, saying he knows what it would take to bring employers back to the United States. “For me it’s all about good jobs for the American people and a bright and prosperous future,” he said.

For years, Romney’s political opponents have tried to tie him to the practice of outsourcing American jobs. These political attacks have often focused on Bain’s involvement in specific business deals that resulted in job losses.

But a Washington Post examination of securities filings shows the extent of Bain’s investment in firms that specialized in helping other companies move or expand operations overseas. While Bain was not the largest player in the outsourcing field, the private equity firm was involved early on, at a time when the departure of jobs from the United States was beginning to accelerate and new companies were emerging as handmaidens to this outflow of employment.

Bain played several roles in helping these outsourcing companies, such as investing venture capital so they could grow and providing management and strategic business advice as they navigated this rapidly developing field.

Over the past two decades, American companies have dramatically expanded their overseas operations and supply networks, especially in Asia, while shrinking their workforces at home. McKinsey Global Institute estimated in 2006 that $18.4 billion in global information technology work and $11.4 billion in business-process services have been moved abroad.

While the export of jobs has been disruptive for many workers and communities in the United States, outsourcing has been a powerful economic force. It has often helped lower the prices that American consumers pay for products and created a global supply chain that has made U.S. companies more nimble and profitable.

Romney campaign officials repeatedly declined requests to comment on Bain’s record of investing in outsourcing firms during the Romney era. Campaign officials have said it is unfair to criticize Romney for investments made by Bain after he left the firm but did not address those made on his watch. In response to detailed questions about outsourcing investments, Bain spokesman Alex Stanton said, “Bain Capital’s business model has always been to build great companies and improve their operations. We have helped the 350 companies in which we have invested, which include over 100 start-up businesses, produce $80 billion of revenue growth in the United States while growing their revenues well over twice as fast as both the S&P and the U.S. economy over the last 28 years.”

Until Romney left Bain Capital in 1999, he ran it with a proprietor’s zeal and attention to detail, earning a reputation for smart, hands-on management.

Bain’s foray into outsourcing began in 1993 when the private equity firm took a stake in Corporate Software Inc., or CSI, after helping to finance a $93 million buyout of the firm. CSI, which catered to technology companies like Microsoft, provided a range of services including outsourcing of customer support. Initially, CSI employed U.S. workers to provide these services but by the mid-1990s was setting up call centers outside the country.

Two years after Bain invested in the firm, CSI merged with another enterprise to form a new company called Stream International Inc. Stream immediately became active in the growing field of overseas calls centers. Bain was initially a minority shareholder in Stream and was active in running the company, providing “general executive and management services,” according to SEC filings.

By 1997, Stream was running three tech-support call centers in Europe and was part of a call center joint venture in Japan, an SEC filing shows. “The Company believes that the trend toward outsourcing technical support occurring in the U.S. is also occurring in international markets,” the SEC filing said.

Stream continued to expand its overseas call centers. And Bain’s role also grew with time. It ultimately became the majority shareholder in Stream in 1999 several months after Romney left Bain to run the Salt Lake City Olympics.

Bain sold its stake in Stream in 2001, after the company further expanded its call center operations across Europe and Asia.

The corporate merger that created Stream also gave birth to another, related business known as Modus Media Inc., which specialized in helping companies outsource their manufacturing. Modus Media was a subsidiary of Stream that became an independent company in early 1998. Bain was the largest shareholder, SEC filings show.

Modus Media grew rapidly. In December 1997, it announced it had contracted with Microsoft to produce software and training products at a center in Australia. Modus Media said it was already serving Microsoft from Asian locations in Singapore, South Korea, Japan and Taiwan and in Europe and the United States.

Two years later, Modus Media told the SEC it was performing outsource packaging and hardware assembly for IBM, Sun Microsystems, Hewlett-Packard Co. and Dell Computer Corp. The filing disclosed that Modus had operations on four continents, including Asian facilities in Singapore, Taiwan, China and South Korea, and European facilities in Ireland and France, and a center in Australia.

“Technology companies, in particular, have increasingly sought to outsource the business processes involved in their supply chains,” the filing said. “. . . We offer a range of services that provide our clients with a one-stop shop for their outsource requirements.”

According to a news release issued by Modus Media in 1997, its expansion of outsourcing services took place in close consultation with Bain. Terry Leahy, Modus’s chairman and chief executive, was quoted in the release as saying he would be “working closely with Bain on strategic expansion.” At the time, three Bain directors sat on the corporate board of Modus.

The global expansion that began while Romney was at Bain continued after he left. In 2000, the firm announced it was opening a new facility in Guadalajara, Mexico, and expanding in China, Malaysia, Taiwan and South Korea.

In addition to taking an interest in companies that specialized in outsourcing services, Bain also invested in firms that moved or expanded their own operations outside of the United States.

One of those was a California bicycle manufacturer called GT Bicycle Inc. that Bain bought in 1993. The growing company relied on Asian labor, according to SEC filings. Two years later, with the company continuing to expand, Bain helped take it public. In 1998, when Bain owned 22 percent of GT’s stock and had three members on the board, the bicycle maker was sold to Schwinn, which had also moved much of its manufacturing offshore as part of a wider trend in the bicycle industry of turning to Chinese labor.

Another Bain investment was electronics manufacturer SMTC Corp. In June 1998, during Romney’s last year at Bain, his private equity firm acquired a Colorado manufacturer that specialized in the assembly of printed circuit boards. That was one of several preliminary steps in 1998 that would culminate in a corporate merger a year later, five months after Romney left Bain. In July 1999, the Colorado firm acquired SMTC Corp., SEC filings show. Bain became the largest shareholder of SMTC and held three seats on its corporate board. Within a year of Bain taking over, SMTC told the SEC it was expanding production in Ireland and Mexico.

In its prospectus that year, SMTC explained that it was in a strong position to meet the swelling demand from other manufacturers for overseas production of circuit boards. The company said that communications and networking companies “are dramatically increasing the amount of manufacturing they are outsourcing and we believe our technological capabilities and global manufacturing platform are well suited to capitalize on this opportunity.”

Just as Romney was ending his tenure at Bain, it reached the culmination of negotiations with Hyundai Electronics Industry of South Korea for the $550 million purchase of its U.S. subsidiary, Chippac, which manufactured, tested and packaged computer chips in Asia. The deal was announced a month after Romney left Bain. Reports filed with the SEC in late 1999 showed that Chippac had plants in South Korea and China and was responsible for marketing and supplying the company’s Asian-made computer chips. An overwhelming majority of Chippac’s customers were U.S. firms, including Intel, IBM and Lucent Technologies.

A filing with the SEC revealed the promise that Chippac offered investors. “Historically, semiconductor companies primarily manufactured semiconductors in their own facilities,” the filing said. “Today, most major semiconductor manufacturers use independent packaging and test service providers for at least a portion of their . . . needs. We expect this outsourcing trend to continue.”

Mitt Romney’s presidential campaign asked Florida Governor Rick Scott to tone down his statements heralding improvements in the state’s economy because they clash with the presumptive Republican nominee’s message that the nation is suffering under President Barack Obama, according to two people familiar with the matter.

Scott, a Republican, was asked to say that the state’s jobless rate could improve faster under a Romney presidency, according to the people, who asked not to be named.

What’s unfolding in Florida highlights a dilemma for the Romney campaign: how to allow Republican governors to take credit for economic improvements in their states while faulting Obama’s stewardship of the national economy. Republican governors in Ohio, Virginia, Michigan and Wisconsin also have highlighted improving economies.

Scott should follow the advice of the Romney campaign and it won’t undermine his own message, said Mac Stipanovich, a political strategist and lobbyist in Florida.

“This is one of those situations where you could have it both ways and there’s enough truth in it that it would resonate,” Stipanovich said. “It would be better if everybody was singing from the same hymnal.”

Facebook it: https://my.barackobama.com/obamanatovid Tweet it: https://my.barackobama.com/obamanatotwvid Tumblr it: https://my.barackobama.com/obamanatotbrvid
President Obama responds to questions during a press conference at the 2012 Chicago NATO Summit.
President Obama: “Well, first of all I think Cory Booker is an outstanding mayor. He’s doing great work in Newark and obviously helping to turn that city around. And I think it’s important to recognize that this issue is not a, quote, distraction. This is part of the debate that we’re going to be having in this election campaign about how do we create an economy where everybody from top to bottom, folks on Wall Street and folks on Main Street, have a shot at success, and if they’re working hard and they’re acting responsibly, that they’re able to live out the American dream.

Now, I think my view of private equity is that it is — it is set up to maximize profits and that’s a healthy part of the free market. That’s – that’s part of the role of a lot of business people. That’s not unique to private equity, and as I think my representatives have said repeatedly, and I will say today, I think there are folks who do good work in that area, and there are times where they identify the capacity for the economy to create new jobs or new industries. But understand that their priority is to maximize profits. And that’s not always going to be good for communities or businesses or workers.

And the reason this is relevant to the campaign is because my opponent, Governor Romney, his main calling card for why he thinks he should be president is his business experience. He’s not going out there touting his experience in Massachusetts. He’s saying,’ I’m a business guy and I know how to fix it,’ and this is his business.
And when you’re president, as opposed to the head of a private equity firm, then your job is not simply to maximize profits. Your job is to figure out how everybody in the country has a fair shot. Your job is to think about those workers who get laid off and how are we paying them for their retraining? Your job is to think about how those communities can start creating new clusters so that they can attract new businesses. Your job as president is to think about how do we set up a equitable tax system so that everybody’s paying their fair share that allows us then to invest in science and technology and infrastructure, all of which are going to help us grow.
And so, if your main argument for how to grow the economy is, ‘I knew how to make a lot of money for investors,’ then you’re missing what this job is about. It doesn’t – it doesn’t mean you weren’t good at private equity, but that’s not what my job is as president.
My job is to take into account everybody, not just some. My job is to make sure that the country is growing not just now, but ten years from now and twenty years from now. And so, to repeat, this is not a distraction. This is what this campaign’s going to be about, is: what is a strategy for us to move this country forward, in a way where everybody can succeed? And that means I’ve got to think about those workers in that video just as much as I’m thinking about folks who have been much more successful.”

Reporter: [inaudible]

President Obama: “What I would say is, is that Mr. Romney is responsible for the proposals he’s putting forward for how he says he’s going to fix the economy, and if the main basis for him suggesting he can do a better job, is his track record as the head of a private equity firm, then both the upsides and the downsides are worth examining.”

Are you in? https://my.barackobama.com/swissbankad
“Swiss Bank Account” highlights Mitt Romney’s belief that a strong economy is built on outsourcing, loopholes and risky financial deals. As a corporate CEO, he shipped American jobs to places like Mexico and China. As governor, Romney outsourced state jobs to India, and now as a candidate for president he is pushing tax breaks for companies that ship jobs overseas.
Romney’s economic scheme stands in stark contrast with President Obama’s efforts to continue moving the country forward by rebuilding an economy that’s meant to last, by out-building, out-innovating and out-educating the rest of the world, and making the things the rest of the world buys by closing loopholes and providing incentives that are bringing jobs back to America.

The video outlines the challenges America faced as President Obama took office at the height of the worst recession in almost a century and details the progress that has been made reclaiming the security of the middle class and building an economy that’s meant to last, where hard work pays and responsibility is rewarded.

President Obama’s political comeback over the past several months aligns neatly with when he began more aggressively attacking the GOP and politicking for economic growth and equality back in September.

But over that same stretch, the economy began moving in the right direction. Indicators of economic growth started moving upward, and the eye-popping indications of economic weakness started moving downward. That’s surely had an effect. And if the trends continue, it augurs very well for Obama in the general election.

Just a quick note that the 2009 spike in new auto sales is attributable to the Cash for Clunkers program, enacted by Democrats when they controlled both houses of Congress.

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